Limitations of budgeting

 Everything has advantages and disadvantages, one would not believe that budgeting also has disadvantages. Below are disadvantages of budgeting..

1. The budgets are prepared on the basis of estimates. If the estimates are wrong, the budgets will be misleading. 

2. Future is uncertainty and cannot be precdictable accurately. A budget is prepared for future period. Hence the budget does not show reality.

3. The budgets may be revised from time to time because of changed conditions.  If so it leads to more administration expenses.

4. If the budgets are revised frequently, the employees can lose their in budgeting. 

5. A budget cannot be used as a substitute for management..